Question

Which of the following expenditures is/are capital expenditures?

• A. Preliminary expenses incurred in setting up a joint stock company
• B. Repairs to furniture
• C. Wages paid to workers for converting raw material into finished goods.
• D. None of the above

Answer 1

Answer: (D)

None of the above

The expenses incurred to the formation of a company are termed preliminary expenses. Preliminary expenses are treated as intangible asset and shown on the asset side of the balance sheet under the head miscellaneous asset. Repairs to furniture and wages paid to workers for converting raw material into finished goods is related to normal business operations. These are revenue expenditure.